Most likely you have a large common mode noise interfering with a differential current source, sense.
Try a large CM balun or ferrite sleeve or twin coupled choke to the twisted pair to raise CM impedance and thus CMRR but keep DM impedance relatively low compared to Zc(f)
If that fails, reduce area of loop with a smaller gap . water has a dielectric constant of 80 and pvc is ~3 but it is in series with electrodes to water.. Thus it is like a variable large cap in series and parallel with a small caps.
Noise can be measured on each pin and Vcc and gnd with care to isolate further.
LC oscillator might reject noise more , depending on nature of noise
Do you have an LCR meter?
Can you vary the center frequency vs stability and plot?
Noise current or voltage will depend on Zc(f) as will excitation. Obviously you want to improve SNR or excitation to noise ratio in a low Q measurement device prone to EMI noise.
CM choke.... F vs stability... noise ingress.. Vcc noise, shielding....